Brexit slowing down economic growth in the Netherlands

The Dutch economy is projected to grow by 1.7% this year. Next year, this will be 1.6%, whereas last June, CPB Netherlands Bureau for Economic Policy Analysis predicted a 2.1% growth for 2017. The underlying recovery of the economy is progressing, but the uncertainty following the UK Brexit referendum, in the short term, will have negative effects on consumption and investments, as well as a negative impact on the world trade that is relevant for the Netherlands. The effect of this uncertainty is temporary. In addition to the impact of the Brexit referendum (-0.4 percentage points in 2017), the further reduction in Dutch natural gas production will also temper next year’s growth by 0.2 percentage point of GDP.

Unemployment is projected to stabilise next year (at 6.2%) and the government deficit will decrease (to 0.6% of GDP). Inflation in the Netherlands will remain very low, with 0% this year and 0.5% in 2017. Development in median household purchasing power will drop from 2.7% this year to 0.7% in 2017. These results are published today in CPB’s interim projections which, so soon after the UK vote to leave the EU, are more uncertain than usual.